Understanding Part I of the No Surprises Act

Executive Summary

The No Surprises Act (NSA) imposes restrictions on surprise medical billing for certain healthcare services. Healthcare organizations and physicians should be aware of the new requirements of the NSA and should adjust their practices to comply with the act. 

On January 1, 2022, portions of the NSA went into effect by way of two interim final rules, titled Requirements Related to Surprise Billing Part I and Part II. The NSA aims to protect patients with health insurance from what is known as “surprise billing” or “balance billing.”

Surprise billing occurs when patients are treated for an emergency at an out-of-network (OON) facility or by an OON provider at an in-network facility for non-emergencies without being made aware that the provider is OON. Afterwards, the patient is unexpectedly billed directly for the balance not covered by their health plan. A common example of surprise billing is when a patient has surgery at an in-network facility and receives a bill from an OON anesthesiologist for the balance not covered by the patient’s health plan.

Under the new rules, it will be illegal for certain healthcare providers to bill patients more than the in-network cost-sharing price for certain services. In addition, providers covered under the NSA must settle payment disputes directly with the patient’s healthcare plan starting January 1, 2022.

This article explores the impact Part I will have on healthcare organizations and how healthcare organizations can come into compliance. 

When Surprise or Balance Billing is Prohibited

 Part 1 of the NSA requires OON providers to participate in in-network cost-sharing under a patient’s commercial health insurance plan for the following services:

• Emergency services administered at healthcare facilities that are licensed to provide emergency services (e.g., hospital emergency rooms, post-emergency stabilization services, and emergency services rendered at urgent care practices)
• Non-emergency services provided by an OON provider at in-network hospitals or ambulatory surgical centers
• Air ambulance transportation services (both emergency and non-emergency)

Part 1 of the NSA does not apply to traditional private physician practices. 

Notice and Consent Exception

Under Part I, covered OON providers working at in-network facilities as defined under Part I (i.e., hospitals and ambulatory surgical centers) will generally no longer be allowed to directly bill patients for the balance not covered by their health plan and must instead negotiate payment directly with the patient’s health plan. However, while emergency services must virtually always be billed at the patient’s in-network cost sharing rate, non-emergency OON providers and facilities can still bill higher OON cost-sharing rates directly to patients if the patient is notified of and consents to the OON charges beforehand.

Both notice and consent must be given at least 72 hours before the non-emergency OON service is provided. If the appointment is made fewer than 72 hours before the appointment date, notice and consent must be given on the day the appointment was made. But if notice and consent are to be provided on the same day the service is provided, both notice and consent must be provided three hours prior to the service to be considered “truly voluntary.” The notice and consent forms must also indicate which specific providers or facilities are OON along with a good faith estimate of the charges.

The notice and consent forms cannot be incorporated into other documents and must be provided to the patient apart from other forms and documents. Patients must sign and date the notice form on the date notice was given and they must also sign and date the consent form on the date consent is given. Healthcare providers are required use the notice and consent forms issued by the Department Health and Human Services (HHS).

Disclosure Requirements

 Part I also requires that providers and facilities subject to Part I give each patient a disclosure notice that describes the patient’s protections against balance billing. Healthcare providers must provide this disclosure notice directly to the patient on a one-page, double-sided form (with font no smaller than 12-point) in person or via mail or e-mail, whichever the patient prefers. The disclosure notice must be provided to the patient before the provider requests payment from the patient or the patient’s health plan. The HHS has provided a model disclosure notice that healthcare organizations may use in lieu of creating their own.

 If patients access an organization’s facility, the disclosure notice must made publicly available on a sign posted in a prominent location. It also must be available and searchable on the healthcare organization’s website (if one exists).

 Part I permits in-network providers to provide disclosure notices to patients on behalf of the OON providers working within their facility if a written agreement to do so is in place between the facility and the OON provider. The written agreement will place liability for failing to provide patients with the disclosure on the facility instead of with the OON providers.

Potential Damages

The Department of Health and Human Services (HHS) may impose civil monetary penalties of up to $10,000 per violation. However, such penalties will be waived if the OON provider unknowingly violates the provisions of Part I and withdraws the bill that was in violation within 30 days and reimburses the health plan or individual that was billed.

Recommended Actions

Healthcare providers and facilities can use the following checklist when assessing compliance with Part I.

1. Determine if your services are covered under Part I (i.e., emergency services, hospitals, and ambulatory surgical centers). Part 1 of the NSA does not apply to traditional physician private practices.

2. Hospitals and ambulatory surgical centers providing non-emergency services should determine which services the notice and consent exception may apply to and which services are excluded from the notice and consent exception. 

3. Develop a process to comply with the notice and consent requirements.

4. Create a disclosure (or use the HHS model disclosure) and post it prominently at your facility and on your website.

5. If your facility employs OON providers, determine whether your facility should create a written agreement to provide patient disclosure notices on behalf of OON providers.

6. Verify that bills for OON patients will no longer go directly to the patient and will go to their health plan instead.

Additional Resources:

CMS No Surprises Act Resources

CMS Balance Billing Overview